• Notification Date: 27-11-2023
• Notification No: N/A

Income Tax Department’s Notice to Diamond Companies in Surat and Mumbai

The Income Tax Department has started a major crackdown on the diamond companies in Surat and Mumbai. In the last two years, around 5,000 notices have been issued to several businessmen for cross-verification in search operations conducted on several diamond companies in the city, including those from Surat and Mumbai. 

Summons have also been issued against many diamond company owners and their statements will be taken soon. Approximately Rs. 2,000 crores worth of diamond transactions have come under the radar of the Income Tax department. Tensions have risen among diamond company owners who have shown their business in cash as they ought to pay 100% penalty. 

Chartered Accountants said that the IT department carries out cross verification of the cash entries with the opposite parties. These entries are checked to make sure they are not bogus. 

During the search and seizure operations against the diamond companies in the last two years, the Income Tax department unearthed two parallel transactions in the books of accounts of the diamond companies. The rough diamonds purchases were not shown in the books and later they were polished and sold in the market in cash. The IT has received about 10,000 such entries which are currently being cross verified. At present, notices have been given in 5 thousand cases. Notices have been given to the opposite party with whom the diamond companies mentioned in their documents related to sale and purchase of diamonds or property in the raid. 

It is being ascertained whether the entries that have been made have actual transactions or they are just on paper to evade tax. IT department suspects that some traders have shown only two entries for the year and the transactions have been inflated. Apart from this, the bank accounts were closed after the entry.